United States: With No Civil Penalty, Goodyear FCPA Settlement Highlights Benefits Of Cooperation And Remedial Actions

The Securities & Exchange Commission ("SEC") announced last week that it charged The Goodyear Tire & Rubber Company ("Goodyear") with violating the Foreign Corrupt Practices Act ("FCPA"), and that Goodyear agreed to pay more than $16 million to settle the SEC's charges. The SEC did not, however, impose any civil penalty, stressing Goodyear's self-reporting of the violation, cooperation with the SEC's investigation, and prompt remedial actions. The case highlights steps a company can take after learning of an FCPA violation to minimize sanctions, but it also serves as a useful reminder that parent companies must carefully monitor their subsidiaries and operations in high-risk jurisdictions to avoid potential liability under the FCPA.


According to the SEC, from 2007 to 2011, a Goodyear subsidiary in Kenya, Treadsetters Tyres Ltd. ("Treadsetters"), and a subsidiary in Angola, Trentyre Angola Lda. ("Trentyre"), routinely paid bribes to employees of government-owned entities, private companies, and other local authorities to secure tire sales. The two Goodyear subsidiaries made over $3.2 million in illicit payments, and the bribery payments were falsely recorded as legitimate business expenses. Both the payments and the resulting revenue were consolidated into Goodyear's financial reports.

The SEC charged that Goodyear did not prevent or detect the bribes at either subsidiary because Goodyear failed to implement adequate FCPA compliance training and controls at the subsidiaries. The SEC further charged that Goodyear did not detect the bribes because it failed to conduct adequate due diligence when it acquired Treadsetters in 2006.

On February 24, 2015, the SEC initiated settled cease-and-desist proceedings, finding that Goodyear violated the books and records and internal control provisions of the federal securities laws: Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. Under the terms of the settlement, Goodyear must pay over $14 million in disgorgement of illicit profits it received as a result of the bribes, plus an additional $2.1 million in prejudgment interest. Notably, the SEC did not impose any civil penalty. The settlement requires Goodyear to report its FCPA remediation efforts to the SEC for a three-year period, but does not require that Goodyear retain an independent compliance monitor for any portion of the three-year period. Goodyear neither admitted nor denied the SEC's findings.


The SEC expressly stated it was not imposing a civil penalty based upon Goodyear's cooperation in the investigation, and the settlement highlights Goodyear's extensive cooperation and remedial efforts, including the following:

  • After learning about the bribes, Goodyear promptly halted the improper payments and self-reported to the SEC;
  • Goodyear started an internal investigation and voluntarily produced documents and reports from that internal investigation to the SEC;
  • Goodyear disciplined executives with oversight responsibilities for failing to ensure that adequate FCPA compliance training and controls were in place at the company's subsidiaries in sub-Saharan Africa;
  • Goodyear divested its ownership interest in Treadsetters, and was taking steps to divest its interest in Trentyre; and
  • Goodyear made improvements to its compliance program globally. These included creating a new senior position of Vice President of Compliance and Ethics, which raised the compliance function within the company.

The settlement reaffirms that companies may be able to avoid civil penalties—as well as expensive and intrusive third-party compliance monitors—by self-reporting, active cooperation, and remedial actions.


The settlement further illustrates the SEC's broad view of parent-subsidiary liability under the civil accounting provisions of the FCPA. The SEC can—and does—use the FCPA's accounting provisions to reach corrupt conduct taking place entirely outside the United States. In this case, the SEC did not charge Goodyear under the anti-bribery provisions of the FCPA, and it appears that there would not have been jurisdiction to do so. Specifically, the SEC did not allege any connections between the conduct at the foreign subsidiaries and the parent company in the U.S. In addition, there was no allegation that the parent company knew in advance or played any role in the alleged violations. However, as shown in this case, for an issuer whose stock trades on U.S. exchanges, the accounting provisions of the FCPA do not require the same territorial nexus to the U.S. that the anti-bribery provisions require. This case continues the trend of the SEC using the accounting provisions to reach conduct that it couldn't otherwise reach under the anti-bribery provisions, and reaffirms that global companies can face exposure for the actions of their subsidiaries even when they have no knowledge of, or direct involvement with, the subsidiaries' conduct.


  • In its press release, the SEC went to great lengths to trumpet the concrete credit that Goodyear was given based on its cooperation in the investigation. As a result, companies finding themselves with an FCPA issue will want to consider carefully whether, and how, to work with the agency.
  • This case serves as a very useful reminder that parent companies must carefully monitor their subsidiaries and operations in high-risk jurisdictions. Although the SEC has significant jurisdictional issues to overcome in charging bribery if all of the improper conduct occurred overseas with no U.S. connection, the SEC always has jurisdiction over the books and records, and public financial reports, of a company traded on a domestic exchange.
  • Finally, this case also outlines some of the potential pitfalls of acquiring subsidiaries in foreign countries. Particularly in high-risk jurisdictions, significant thought and effort must go into pre-merger due diligence, and post-merger due diligence and remediation, to protect against violations of the FCPA.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions